Eds and meds, unite: Anchor districts are new engines for job creation

By: May 13, 2016

“In two thirds of America’s 100 largest cities, anchor institutions such as universities and hospitals are the largest employers.” That statistic comes from the Anchor District Council, a trade and advocacy group comprised of community service corporations, hospitals, universities and institutions and companies in anchor districts.

What is an anchor district? It can be defined as a geographic area with a density of institutions like universities and hospitals that are considered fixed “anchors” in a neighborhood because, well, it’s hard to move a collection of 100-year-old buildings. More importantly, however, these anchors stabilize their communities through activities such as creative placemaking and job creation.

Pittsburgh’s own anchor district community is in Oakland, where it’s been since the early 20th century. Today, i many healthcare institutions, arts and culture organizations and universities cluster and connect with large businesses, small firms, startups, incubators and accelerators in Oakland. It’s the hotbed of Pittsburgh’s “eds and meds” where institutions such as UPMC, Carnegie Mellon University and the University of Pittsburgh work closely and collaboratively to conduct research and spur innovation.

A recent story in CityLab, “How Anchor Instititions like Hospitals and Universities Can Help Cities,” refers to these institutions as “economic powerhouses.” Tanvi Misra writes: “Universities represent three percent of the national economic output and employ more than 3 million people. Hospitals employ even more: Five million. One in eight universities and one in 15 hospitals are located in inner cities.”

It is these institutions, often located in anchor districts, that are adding jobs at an impressively fast clip. In part, this is because the healthcare sector, in particular, is rapidly expanding. According to the U.S. Bureau of Labor and Statistics Employment Projections, “Occupations and industries related to health care are projected to add the most new jobs between 2012 and 2022. Total employment is projected to increase 10.8 percent, or 15.6 million, during the decade.”

University Circle Inc. (UCI) Marketing Manager David Razum says that although the numbers aren’t all in, early data suggests that anchors may be creating jobs at a faster rate than traditional downtowns. “During this last recession, the fields of healthcare and education continued to grow jobs nationally at about 8-9 percent,” he says. Whereas traditional downtowns are just now bouncing back from the recession, anchor districts have never really stopped growing.

Anchors gain some clout

These anchor districts may be adding more than jobs. Bruce Katz, Vice President at the Brookings Institute and founding director of the Brookings Metropolitan Policy Program, says anchor districts represent a type of innovation district thriving in today’s economy. “Innovation is when new or improved ideas, products, services, technologies, or processes create new market demand or cutting-edge solutions to economic, social and environmental challenges,” he writes with co-author Julie Wagner in “The Rise of Innovation Districts: A New Geography of Innovation in America.”

According to Katz, the “anchor-plus model” being touted by the Anchor District Council occurs where “large scale mixed-use development is centered around major anchor institutions and a rich base of related firms, entrepreneurs and spinoff companies involved in the commercialization of innovation.” Katz says these areas are a rich, fertile ground for innovation that can bring back cities.

In 2012, UCI launched the Anchor District Council as a way to realize their unique leveraging potential. The members include community service corporations and institutions in Boston, Philadelphia, Baltimore, Pittsburgh, Detroit, Cincinnati, Columbus, Akron & Worcester, Massachusetts. The council meets annually to network, advance policy, learn best practices and study ways to innovate. The first meeting was held in Cleveland. In 2013, the council met in Pittsburgh’s Oakland neighborhood and the 2014 meeting was held in Midtown Detroit.

Two years in, the Anchor District Council is now laser-focused on innovation and collaboration. “This is very much becoming a national movement to recognize and study, quantify and encourage” growth and innovation in anchor districts, says Razum. “That’s what the Anchor District Council is focused on next.”

Katz, who gave the keynote speech at UCI’s annual meeting last month, offers a compelling illustration about the impact of anchor districts on cities. He cites the radical change in West Philly’s University City neighborhood, home to the University of Pennsylvania, Drexel University and The University City Science Center. “Eighty two percent of office market construction in Philadelphia occurred in University Center; it’s only .02 percent of the land mass of Philly,” he says.

Collaboration leads to innovation

Anchor collaboration happens because of proximity, and that in turn leads to innovation. “Innovation districts are emerging because we’re moving from closed innovation to open innovation,” Katz told the UCI crowd. “Companies that want to develop ideas and discoveries for the market want to be near other companies.”

After World War II, workers drove to far-away office parks and worked alone. Today that’s changed. And to attract workers to these areas, they must be vibrant. “Innovation hubs that include amenities, retail, housing, transportation and entertainment are the dynamics defining 21st century America.”

Katz paid tribute to Cleveland, saying that “University Circle is ahead of the curve” and “may have been the first innovation district in the country.” Referring to the concentration of anchor institutions in and around the Circle, Katz noted, “The next 10, 15 or 20 years are going to be quite remarkable because innovation, innovative firms, talented workers are collapsing back to the urban cores.”

UCI President Chris RonayneUCI President Chris Ronayne agrees that anchor districts are a bright spot in older cities: “The legacy of industrial cities and Rust Belt cities with heavy manufacturing, steel and auto parts industries all have one common variable: eds and meds.” As traditional industries have faded, “We are the new economy.”

In their research report, Katz and Wagner lay out how innovation districts represent a transformative shift in economic development: “Unlike customary urban revitalization efforts that have emphasized the commercial aspects of development (e.g., housing, retail, sports stadiums), innovation districts help their city and metropolis move up the value chain of global competitiveness by growing the firms, networks, and traded sectors that drive broad-based prosperity.”

Who are the anchor district innovators?

Once known as an artist who led a punk-metal band and a media arts group, Pittsburgh’s Nathan Martin holds an MFA in electronic art but is now the CEO of technology company Deeplocal, which offers marketing and product development services. It’s known for its technology-driven marketing campaigns, including a street-printing machine for Nike, a mind-controlled bike for Toyota, and a robotic pitching machine for Google Fiber.

Nathan Martin of DeeplocalMartin credits his time as an artist-in-residence at the Frank-Ratchye Studio for Creative Inquiry at Carnegie Mellon University, a laboratory for atypical, anti-disciplinary, and inter-institutional research at the intersections of arts, science, technology and culture, for helping him to create Deeplocal. While he was there, he developed the collaborative mapping software that led to his spinout from CMU in 2006. “The Studio was an art and technology research lab and an ideal place for me to develop and form the basis of Deeplocal,” he says.

Another anchor district innovator is Cleveland’s Chris Wentz, who wants his company, EveryKey, to be the next Apple or Microsoft. So does every founder, but his product is getting legs thanks to winning a pitch contest and a successful Kickstarter campaign. EveryKey is a bracelet you wear on your wrist that replaces passwords and physical keys. As Wentz and cofounder CiCi Quian bring it market, they have $100,000 in presales.

Chris Wentz of EveryKeyWhat began as a class assignment turned into an entrepreneurial venture. Wentz and Quian were taking an entrepreneurship class at Case Western Reserve University and needed to come up with ideas for new businesses. They got on the topic of how annoying it was to get locked out of their dorm rooms and not be able to access their online accounts due to forgotten passwords. The idea for EveryKey was born. Wentz and Quian went to shopping malls to conduct research, talking to consumers about whether they’d buy the product.

Wentz, who is originally from Boulder, Colorado, currently lives and works in the Uptown district. EveryKey employs 25 people, 10 contractors and 15 interns who work part-time. Wentz has maintained close ties to Case and has no plans to leave Cleveland. “My big dream is to stay a Northeast Ohio company as long as make sense, and it makes a lot now,” he says. Funding sources for local entrepreneurs is one incentive keeping him here.

With orders shipping next spring, Wentz is in talks with distributors in the U.S. and abroad. “There’s big interest,” he says. With growth like this, he won’t be able to run the company out of his Uptown apartment much longer. He won’t go far, though — he’s looking for office space down the road on the HealthTech Corridor.

The Lung Flute is a prescription medical device that helps to break up lung congestion in patients suffering from chronic obstructive pulmonary disease (COPD) as well as bronchitis, pneumonia, asthma and other chronic respiratory ailments.

“Being affiliated with and supported by the hospital campus where there is a collision of like-minded people like doctors, researchers, and academics is what bring The Lung Flute to market,” Codella says. Today, Medical Acoustics sells its Lung Flute in North America, Europe and parts of Asia.

The benefits of anchor districts aren’t just for founders of companies like EveryKey, Deeplocal and Medical Acoustics, says Ronayne. That’s because districts are increasingly reaching out to and engaging communities around them. For example, not long ago, the Uptown area of University Circle was a food desert. UCI & Case partnered to help open Constantino’s Market on Euclid Avenue. Other examples include farmers’ markets at UH and the Clinic, the Greater University Circle Initiative and arts and culture programming for families.

“We are no longer running from poverty,” says Ronayne. “We’re right next to poverty. So how do we take this growth and help it benefit people who’ve been left out of the economy? You can extend broadband and internet; use resources to regenerate and build highly sophisticated schools and get people on track for jobs in the innovation economy.”